China’s Tencent Music Entertainment Group exceeded Wall Street’s profit forecast for the second quarter on Monday, as its advertising business rebounded and more people subscribed to its music streaming platform.
Paid users of the company’s online music service increased by 41% to 66.2 million, thanks to investments in long-form audio and an expanded and updated music library through licensing agreements with Universal Music Group, Sony Music and other record companies.
Tencent Music shares rose 1.2% in after-hours trading. Due to Beijing’s repression of its technology giants and a ruling prohibiting the company’s parent company Tencent from signing an exclusive music copyright agreement, their market value has shrunk by half this year.
The company said it expects this decision to have some impact on its operations, but did not specify the specific figures.
The loss of exclusive rights means that Tencent Music may have to redouble its efforts to build a more interactive community, while facing the challenge of byte beating. The company is using Douyin (the Chinese version of TikTok) to promote music supported by complex algorithms.
Tencent Music’s social entertainment service business, including a karaoke platform where users can live concerts, increased its revenue by 7.4% in the quarter to 5.06 billion yuan (approximately 58 billion rupees), accounting for the majority of its revenue.
Total revenue increased by 15.5% to 8.01 billion yuan (about 91.8 billion rupees), but lower than the 8.13 billion yuan (about 93.1 billion rupees) estimated by Refinitiv IBES.
The company’s adjusted earnings per American depositary receipt was 0.66 yuan (approximately 8 rupees), higher than the expected 0.62 yuan (approximately 7 rupees).
© Thomson Reuters 2021